Prices are high but I hope they would go down soon. I'm saving money for a 2-bedroom apartment and I hope to buy one next year. Maybe I'll wait for a few years more.
man, i'm feeling pretty confident right about now. ------------- Orange County home price hits new high: $800,000 after 11.6% jump
It's all a matter of location. Some markets are hot. Some are leveling off. There is now a higher inventory in Manhattan. But prices are still high. KB Homes is not building any new subdivisions.
There was a covid buying frenzy, and surplus inventory is not high at all. Couple that with the building material costs and lumber etc. Rising faster than used home prices. Builders have been selling their inventory out. It aint gittin cheaper. But the may be banks loading up their books with foreclosures soon.
With low rates not rising anytime soon; the homebuyers are at advantage. Tough for the mortgage industry to generate more volume, and have almost no mark-up. In my area, pricing goes up, period. Demand exceeds supply in a big city. It's not like out in the suburbs or rural area where other factors influence pricing. New York, Hawaii, and California will probably stay in my lifetime.
I got a cold call yesterday, from an agent for a buyer looking to buy "4 or 5 properties". She asked if I was open to hearing an offer; I told her no because this is the only place I got lol. Very happy with my location, I wouldn't be able to get back into this neighborhood if I gave this up. I've heard stories like this around the country, buyers are looking for homeowners to sell. Seems the market is so hot that they've got to get houses before they can make it to the market.
My buddy bought a house 18 months ago in Tempe, Arizona. It is now worth 100,000$ more than it was just 18 months ago and he has not done anything to increase the value of the house on his own. He paid 300,000$ and now it is worth 400,000$ and this is a 2 bedroom, 2 bath nothing special. We are looking for a new place now and as bad as we would love to buy, we have been priced out of the market. Another year of renting ahead. At this rate we will never be able to afford a house.
This is happening everywhere. The only way to stay ahead of it is to try get approved for a mortgage by doing what ever it takes to get yourself into the real estate market. Some people are hoping that if rates go up, sellers will drop prices because of less demand, but I think that will just lead to more rentals than anything else.
https://calculatedrisk.substack.com/p/real-house-prices-price-to-rent-ratio-27f?s=r Nice to see this in a simple graph; can read the above link if you want to know details. Houses are now the "least affordable" since 2008 banking/housing crisis. But nowhere near as unaffordable as they were in the early 80's (they had very high mortgage rates back then).
This is a very interesting metric and way of thinking about the housing market. I have had a lot of discussions with older family members regarding historical "affordability" of real estate. The high interest rates in the early '80s did definitely add a lot to the monthly payment in addition to the higher expected down payments. I have a thought on that though. I view home ownership to be a very long term investment as opposed to perhaps others' "moving on up" philosophy. Therefore the affordability of a house bought for long term living is on a sliding scale. Buying then must have been a really hard pill to swallow based on that graph; however, if viewed through a very long term ownership lens, the continuing drop in interest rates afterward would have yielded a nice reduction in the monthly payment should the owner have refinanced. Also, buying in a very high priced market but historic low lending rates still locks you into a high property tax bill. In other words, it is possible to refinance some relief over time, but you are stuck with the purchase price and associated property taxes forever. I have not dug deep into this subject to create an apples to apples comparison through a roughly 10-20 year span of time where a single piece of property's (were it available at any time) monthly payment is analyzed assuming refinancing was taken when rates declined. I am not old enough to have lived through most of this graph, becoming a homeowner in 2011 here in Southern California. I can tell you with certainty though that house prices around here have at least doubled since then and the difference in affordability is way more pronounced than shown in the graph above (though I know the graph is nationwide, but still). Perhaps some of you might be able to speak to the validity of my thoughts based on your own experiences.
I agree with what you're saying, and it made me look at that graph another way too. Going by the graph, just because you bought in early 80s does not mean you made a poor decision and got stuck with the least affordable possible house. Like you said, you can refinance. So actually the affordability for everyone, even people who already have their home, improves. It seems like that kind of environment, where affordability is improving, makes it possible for previous homeowners to acquire more properties. So now we come to the present, where affordability peaked in the 2010s. That would then imply that even I, who bought ~5 years ago, would find my house less affordable now. It's interesting what that means.
